Emerging Market ETF Streak Nears 10 Weeks, Outsized 13% Lead Over S&P 500
The iShares MSCI Emerging Markets ETF has recorded nine straight weekly gains, nearing a historic 10-week streak, while SPDR S&P 500 ETF Trust has underperformed by 13 percentage points in two months and 25 points in 12 months. This marks the widest EM-to-US performance gap since 2008.
1. Emerging Market Outperformance
The iShares MSCI Emerging Markets ETF has posted nine consecutive weekly gains and could extend to a record ten-week streak, marking its longest run since launch. Over the past two months it has outperformed the SPDR S&P 500 ETF Trust by 13 percentage points and by 25 points over the last 12 months.
2. Rotation and Valuation Drivers
Investors are rotating out of U.S. software and long-duration growth stocks facing AI disruption while commodities and cyclical sectors regain leadership. After a decade of underperformance, emerging markets trade at more attractive valuations relative to the S&P 500, and a weakening U.S. dollar is drawing capital into non-U.S. equities.
3. Implications for SPDR S&P 500 ETF Trust
The SPDR S&P 500 ETF Trust has traded in a sideways pattern, lagging the surge in emerging markets and signaling potential headwinds for U.S. equity inflows. Continued relative underperformance could prompt further fund outflows as portfolio managers seek higher returns abroad.
4. Historical Context and Outlook
The last time the emerging markets ETF sustained such a run was in 2005, the outset of a multi-year leadership cycle, suggesting a possible structural shift away from U.S. mega-cap dominance. If this pattern holds, it may mark the beginning of an extended period of emerging market leadership.